Courtney Wynter, general manager of the Jamaica Mortgage Bank (JMB), says that creative approaches will be needed to significantly improve levels of home ownership in Jamaica, as real income and the ability to afford a mortgage among the population continues to slip.

There is an affordability problem, Wynter told the Jamaica Observer, noting that over the past 10 years inflation and depreciation of the Jamaican dollar has significantly outstripped the movement in salaries.

Jamaica is lagging behind regional targets for mortgages disbursed as a percentage of GDP.

While the regional average for mortgages to GDP was 22 per cent in 2012, Jamaica falls far behind. An assessment of the National Housing Trust (NHT) by the Caribbean Policy Research Institute (CaPRI) published in April 2016 showed mortgages as a percentage of GDP in 2012 at two per cent.

This, compared to Antigua and Barbuda at 26 per cent; The Bahamas at seven per cent; Barbados at 30 per cent; Dominica at 20 per cent, Grenada at 28 per cent and Guyana at 14 per cent of GDP.

St Kitts and Nevis mortgages disbursed as a percentage of GDP are 25 per cent St Lucia 26 per cent, and Trinidad and Tobago, 11 per cent.

CaPRI’s publication, An Assessment of the National Housing Trust, indicates that the two-bedroom concrete structures with just the basic amenities, desired by most Jamaicans, are "expensive assets that require a substantial portion of buyers’ lifetime incomes".

Overall, it gives low grades to the NHT which, with accumulated capital of $126 billion, along with an additional $76 billion in employee contributions held in the Trust, has substantially left the housing needs unmet.

Said CaPRI, "The Trust actually requires far less money than it currently receives. The NHT’s present level of housing construction and mortgage financing remains feasible if employer contributions are reduced to two per cent, and employee contributions are eliminated entirely. At that level of contributions, the NHT is infinitely sustainable.

"The remaining three per cent of the wage bill that the trust would no longer receive could then either be left in the pockets of employees and employers (to boost disposable income and profits), or it could be diverted to income taxes (to support the programme of fiscal consolidation)."

CaPRI asserted that an analysis of the distribution of benefits across income levels revealed that middle- and upper-income contributors have received more mortgages than those in the lower-income groups.

Between 2009 and 2014, contributors earning more than $20,000 weekly — which is the highest income group served by the trust — were twice as likely to gain mortgages as contributors earning less than $10,000 — the lowest income group.

CaPRI commented, "Contributors in the lowest income group received only 23 per cent of the mortgages disbursed during the said period, revealing that the vast majority of mortgages went to households that were well above the poverty line. The NHT, therefore, appears to be an instrument of a perverse social transfer, insofar as it taxes poor and rich alike, but the majority of its benefits accrue to those who are better off. Poorer contributors are subsidising wealthier ones."

Wynter said he was in disagreement with the recommendation from CaPRI that the NHT should eliminate or reduce NHT deductions from contributors.

"If any, the NHT should be expanding its contributor base. Other recommendations would also bankrupt the NHT over the long term.

"We agree, however," the mortgage bank head said, "that a review of the NHT’s mandate is timely and could be expanded to participate more widely in the provision of housing solutions. As an example, given the low cost of funding, the NHT should be the primary facilitator of the secondary mortgage market."

The mortgage bank itself has been trying to kick-start the secondary market, in which mortgage providers sell existing mortgages for upfront money which could be invested further in housing.

The JMB in the past has offered to purchase the mortgages at the weighted average price of the pool of mortgages, noting that this would allow lenders to make additional loans, develop a wider client base, and satisfy the needs of more of their customers.

The mortgage company said it would also eventually reduce the cost for writing a mortgage.

Wynter, commenting further on low level of home ownership, also cites a lack of innovation from the mortgage institutions in seeking to address the demand side of housing.

"The National Housing Trust has been very creative in assisting its contributors, but the financial institutions have been very risk-averse in providing unconventional mortgage products to their customers," he asserted.